Wednesday, February 24, 2010

Why Energy Matters

Over on the Automatic Earth, folks are still debating the points I iterated about how energy drives everything, including finance. That in this view, finance is reactive. The dominant view is that finance is driving our crisis and we can ignore energy until we can't.

For my position, I argued that energy and finance interact dynamically, but that energy provides the constraints as to what gets done in the physical world.

Ilargi says this is false. That energy doesn't drive our economy. At times it does, but right now, finance dictates events.

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One point I tend to give short shrift to in my arguments is the 'Eureka!' moment that led me to realize that everything happens in reaction to energy.

And that understanding is fairly simple, and very profound.

Given...
1. Almost all of the energy that we consume is either fossilized, or incoming solar energy.
2. We know pretty accurately, how many BTUs of energy we have available to us.
3. The quantity of available energy determines the limits of industry.

Now in the interest of keeping this short, I'm not going to discuss efficiency improvements as a means of regaining growth in a declining environment at length. Just consider that to keep growing, while feedstocks decrease, requires rapid and continuous improvement forever. Very quickly you get to the point where you need to do infinite work, with zero energy. Diminishing returns, very quickly ends this avenue of exploration.

4. Worldwide, oil production is in a 6% annual decline.
5. Gas and coal are increasing at barely 1% per annum.
6. The production of energy in aggregate is likely then to be in a 3%-4% decline.
7. The quantity of workers continues to grow.
8. Everything we do, all that we are is determined by energy flows. We eat, we work, we produce, we reproduce. All of it requires the consumption of energy.

So our entire world, our lives, our jobs, homes, economy, finance, all of it, is bound by the quantity of energy we have to power it.

Nothing in our lives takes place without consuming energy. Not even thinking.

Nothing in high finance takes place without the consumption of energy.

Everything we do in commerce is a competition to control or consume energy.

Every product is produced by consuming energy. The use of every product, requires the consumption of more energy.

If energy increases, then commerce can increase. If energy is flat, commerce remains flat. If energy declines, commerce must decline.

This isn't an opinion though, many people may think it is one. This is how thermodynamics looks when applied to commercial activities. This is actually a 19th century understanding of the world. That Nobel Prize winning chemist, Frederick Soddy understood this long ago.

And this is the 'Eureka!' thing that I figured out on my own, only to discover like many other exciting ideas, was old and worn before I was born. But this knowledge, pieced together, all of the stuff I learned in school, that didn't fit together. The things that seemed random and disconnected, suddenly had relationships.

And even better, it gave me a framework to do simple modeling from and to make predictions with.

Ilargi believes that our current energy production decline is determined by economics. The only problem with this is that enforced production declines (esp OPEC) typically follow supply gluts which drop the price of oil. I don't know what economics text book he's gotten his learning from, but I'm not aware of a school of thought that says that when prices rise, you should cut production to make less money.

Ilargi refuses to explain why producers are slowing production to make less money as prices keep going higher. I don't think he can explain it. He doesn't know why this is happening. But he can ignore it.

Then there's the little problem that there is broad consensus in the industry that most of the biggest fields are in decline. In this view producers are working harder and harder to backslide. This view fits the declining production / increasing price relationship we are seeing, and doesn't require the suspension of belief.

********************************************

Now this should be enough theory and evidence to support the notion that economies are bound by available energy, and that our energy supply is contracting.

So what does this mean? How does this prove the economy is reacting to energy flows?

The next thing to understand is that our economies depend on growth. Almost every business borrows money to power growth, then repays that that money with interest. Historically those that best use this model, are able to out compete their steady state or slower growth rivals.

In a zero sum economy, one company's growth is dependant on another company's contraction. We are taught even this simple concept in the theory of market share. If you want more market share, then someone else has to lose some market share.

In the energy bound economy, we go outside the market model to understand that expansion of one company means that the price of energy goes up, as it outbids others to get more energy.

If you consider that energy can come in the form of matter, you'll understand how far reaching this concept is. It's not just electricity to power the lights or turn lathes, operate computers etc... The product that is bought and sold is also produced by consuming energy and represents an embodied investment in energy. A steel mill isn't just trading the energy needed to power tools, it's also trading the energy that went into smelting the iron, and refining it into steel.

So in a fixed economy, the expansion of one company's business, drives up costs for everyone. As each jockeys for growth, those that succeed, do so by beating down the competition. But as they grow, they increase their own costs also.

In this struggle, companies often turn to loans to pay up front for the costs of growth. But in aggregate, if every company in a fixed market grows, then predictably, there will be a lot of defaults on the loans. If there is only one winner, then that company will be the only one with a chance to pay off the note.

Only in a situation where energy growth continues indefinitely, can everyone see continued growth, and use that growth to pay interest on loans.

*****************************************************

Now we're in a contracting energy bubble. The odds of growth for any company are very slim. The competition has to go bankrupt at a rate that exceeds the energy decline rate, in order to leave room for those that are left, to grow.

At some point, everyone in finance will catch on that all of their customers are having trouble making payments on their loans. So they'll stop making loans to those customers. Well that's gonna be almost all of them.

In the traditional banking sense, making loans is how you do business.

So what do you do? You must keep making loans, or you lose future revenue.

The government now, doesn't like the slowdown they are seeing across the board. States and municipalities are seeing erosion in their tax rolls.

Everyone wants growth to continue. The Federal Government wants to grow. The State and local governments want to grow. Politicians want to help, and they find innovative ways to stimulate growth.

The bankers say it's an erosion of trust. That they are afraid that their customers can't pay them back. Politicians change laws, and promise in public and private to back loans to stimulate lending and growth.

*********************************************

The road to hell is paved...

So the banks know industry is going out, but real estate hasn't seen a bubble in a while. With government backing they start making loans willy nilly to drive up the market.

Further they get government complicity in unregulated many forms of financial transactions. Banks find still other ways to grow without making traditional loans. They sell that 80s invention, derivative contracts, to governments then, knowing
these will blow up. They take out insurance to cover the costs when they explode.

*********************************************

Now the tightening energy constraints, certainly didn't make any particular event happen.

But it did force the banks to find creative avenues for growth, in a period when real growth was flat and beginning it's decline.

If the banks had not invented phony ways to produce profits from nothing, then they would've been forced to contract with the rest of the economy. There was no legitimate means for them to make increasing quantities of money from sound business practices, and this problem continues today. The only way to make profits is in Ponzi scheme style finances.

And our government knows this to be true. The regulators would rather govern fraud, than a complete economic meltdown.

Those banks still trying to compete with the Ponzi fraudsters will go bankrupt. Soon enough the Ponzi fraudsters themselves will be competing for ever increasing government assistance, to grow faster as the economy as a whole degrades.

In such a view, the fraudsters are self selecting. Their emergence is completely predictable. If they aren't fraudsters, then they are bankrupt or going bankrupt.

As these financial institutions grow in a declining economy, it becomes quite logical and rational that a two tiered economy would manifest.

The first would be the traditional banking and industrial economy. As this economy is in decline, it will slowly deflate, as interest and loans are repaid without new loans being made.

The second economy is the fraud driven banks and their interactios with the Fed, the Federal Government, and government supported industries. As this economy has the power to continually create money and paper over debts, it will keep growing. Defense industries and military agencies certainly fit in this economy.

But in aggregate the two economies will balance when it comes to energy. The two combined in energy consumption must remain at a negative growth rate, even though the fraud economy continues to grow.

This means that the traditional economy that produces jobs, must decline faster, to provide the energy and materials needed to keep the fraud economy growing.

********************************************

This view in my opinion, provides the needed understanding to see the interconnectedness of our physical view of the world with it's relationships between energy and matter, and that of the world of high finance. It provides a view of cause and effect that makes sense of events in differing partsof our economy. It also provides a rational framework for understanding the wheels of high finance, and why our leaders make the decisions they make.

Further, if this view is correct, then it doesn't say anything good about our future. The players in this drama don't have to understand the forces at work, to react to events in their lives. It's unlikely that they do see the bigger trends and the rules of nature at play.

So there's no chance that our policies will adapt to account for the changes in the physical world.

So these trends must continue. The players in charge will make them continue. And the logical progression leads to massive unemployment, with no hope of turning it around without dramatic changes in our government.

This view is only bolstered by independant analysis from some very bright people, looking at our economics issues from other perspectives.

In the next few years, I expect that world energy production will decline at faster rates. With that, we should see an increasing frequency in economic disruptions.

********************************************

And once again, I'm going to boldly make my prediction, that in May we'll see another economic dislocation. I base this on the fact that oil prices continue to rise and that realization is dawning that the economy is not getting better. We should have some really crappy numbers reported for the end of this quarter. By the middle of the next quarter, something is going to give.

Another round of bailouts will likely follow.

Of course, if Obama wanted to distract the public, he coudl start another televised invasion of a soveriegn nation.

28 Comments:

At 2:05 PM, Blogger Weaseldog said...

I've already gotten a response from Ilargi

Ilargi said...

"I argued that energy and finance interact dynamically, but that energy provides the constraints as to what gets done in the physical world.

Ilargi says this is false. That energy doesn't drive our economy."

Any idea who wrote this nonsense? People feel free to twist and turn one's words in any given way if it fits their agendas. Or do they simply lack the active neurons? I get so sick and tired of this stuff. As if I have nothing better to do than respond to hollow statements.


He had to take my words out of context and change their meaning to make his point.

The original line was, "Ilargi says this is false. That energy doesn't drive our economy. At times it does, but right now, finance dictates events."

Which has been his repeated argument. He has said over and over that at this time, finance is a far more important driver of the economy than energy.

 
At 3:26 PM, Blogger Kitty said...

Thank you for writing this Weaseldog. You are grasping something very foundational...

If we understood the interactions of energy demand, growth and finance more of politics would make sense...

I read this and believe it to be very very true:

Now the tightening energy constraints, certainly didn't make any particular event happen.

But it did force the banks to find creative avenues for growth, in a period when real growth was flat and beginning it's decline.

If the banks had not invented phony ways to produce profits from nothing, then they would've been forced to contract with the rest of the economy. There was no legitimate means for them to make increasing quantities of money from sound business practices, and this problem continues today. The only way to make profits is in Ponzi scheme style finances.

And our government knows this to be true. The regulators would rather govern fraud, than a complete economic meltdown.

Those banks still trying to compete with the Ponzi fraudsters will go bankrupt. Soon enough the Ponzi fraudsters themselves will be competing for ever increasing government assistance, to grow faster as the economy as a whole degrades.

In such a view, the fraudsters are self selecting. Their emergence is completely predictable. If they aren't fraudsters, then they are bankrupt or going bankrupt.

As these financial institutions grow in a declining economy, it becomes quite logical and rational that a two tiered economy would manifest.


And the implications are very scary...

I'll keep reading this... it's excellent... my thoughts did stick a little on this part...

Every product is produced by consuming energy. The use of every product, requires the consumption of more energy.

This may be stupid but I think of efficiency issues relative to Google search ads for example...

Efficiency gains are energy savings right?

 
At 3:52 PM, Blogger Weaseldog said...

"Google search ads for example... "

Yeah, but are they getting any work done? :)

 
At 4:18 PM, Blogger Kitty said...

I was thinking of Goog ads in the context of exposing consumers and bitnesses to diff choices.

And changing consumption and sourcing patterns.

Remaking the patterns of use.

Taking less energy and producing more.

 
At 7:12 PM, Blogger edgar said...

Good work Weaseldog,

I see why you left efficiency out of your arguments. My gut reaction is/was to scream out about how efficiency caused by greater available (cheap) energy has led to the concentration of wealth and destruction of the working class as well as enabling mass oppression and environmental destruction on a grand scale. I doubt the decline of this axiom will be a bad thing in the very long run. It will be no fun in the medium term though, that's for sure.

 
At 7:33 PM, Blogger edgar said...

I also understand that you meant energy efficiency gains. I was reminded of that 12 pg. Olduvai report you gave me years ago, so I didn't go into per capita haggling. The biggest problem we face is not energy limits, but rather human nature imo.

 
At 7:47 PM, Blogger Weaseldog said...

Right Edgar. It's because we seek to maximize production that we can generalize in this way.

If we were rational about efficient usage, this theory would not apply well at all, except as an exploration of limits.

 
At 8:31 PM, Blogger edgar said...

Hi again Weaseldog,

I have to tell you Ilargi's argument has some merit. Given enough money people will consume all available resources to the point of hoarding. Also, the sinking value of the usa currency would have a detrimental effect on a rational country's desire to export. Then there is always the land export model you could counter with as well. Humans are irrational. Were it not so the omnipresent suffering and waste would be greatly diminished. I like your statement:

If we were rational about efficient usage, this theory would not apply well at all, except as an exploration of limits.

That's a mind bender. As in what would be the theoretical limits of production be if we used resources witha Vulcan-like logic in an effort to maximize production for the benefit of all? It give me the shivers just thinking about it.

 
At 9:34 PM, Blogger Weaseldog said...

Ilargi is right about a lot of stuff.

He's just being a jerk. All things are wrong and false for him, except for the secret thoughts secreted away in his head.

He's made it clear for instance that the following statements are false. And gotten mad at me for stating them as my opinion.

Energy drives industry and the economy.
Energy and finance interact with each other.
Finance has a role in driving energy policy.

He says he can't express how wrong I am in making such statements. When he says such things, they are the truth as delivered by him, to God's ear.

I think it's the case that he really doesn't like me.

 
At 2:04 AM, Blogger Brunswickian said...

WD,
these things are obviously all interrelated. TAE's position is that finance is the immediate concern. Causality is always a minefield.

It is a pity that smart people that agree on most things, fall out over academic points. I've been guilty of the same.

I think that those who blog on these issues become a tad myopic. Jay springs to mind at once - heh.

Even the well-intentioned end up at loggerheads. What hope do we have?

 
At 4:34 AM, Blogger Weaseldog said...

Brunswickian said... "WD,
these things are obviously all interrelated. TAE's position is that finance is the immediate concern."

That's what I thought. But Ilargi disagrees, then goes back and repeats that point again.

Perhaps he doesn't actually read what I write?

I think that for the purposes of what he is doing, that's a perfectly valid viewpoint. From inside finance it certainly does look like the world is a random and surprising place.

From the bound energy perspective though, finance begins to look like a strategy game, where natural forces leave the financial wizards no choices, but fraud or certain doom.

After all, if you have other people's money to invest or loan, and you see that every business is going under do you invest in them and take a loss? Of course not. But if you can place bets in the markets and the wizards of finance are telling you that this bet or that bet will earn you high interest, you take it, right?

 
At 12:39 PM, Blogger Brunswickian said...

WD, Ilargi is not ignorant of energy or its role. He just says that financial collapse will hit first.

He doesn't say economics limits the amount of oil in the ground. He has said oil exporters are producing as much as they can because they are desperate for money.

We ARE facing economic and financial collapse. Ilargi says this would have happened if there was no oil shortage with examples of previous collapses as evidence. 1930's etc.

At this point I don't see that it matters a whole lot exactly what caused it. The TAE dynamic is that we are facing a massive deflationary depression that will push Peak Oil into the background for years because noone will have any money to pay for it. One hell of a coincidence, of course.

Personally, I think we are very likely to be overwhelmed by WW3.

 
At 1:03 PM, Blogger Weaseldog said...

Brunswickian, yes, that's how I understand Ilargi's position to be.

The 1930s collapse though can be viewed as a problem of over production coupled with under demand. It's a similar problem in one respect to what we're currently in, people have no money to by lot's of cheap plastic crap, so demand has dropped.

"At this point I don't see that it matters a whole lot exactly what caused it."

It only matters if you're interested in forecasting future events. Then it's critically important that you understand how the pieces fit together.

As far as pushing Peak Oil in the background, Ilargi has said that he believes it will drop demand for oil.

Is this what you mean? Or do you mean that it will drop from public consciousness?

If demand drops, then the price should drop. In Ilargi's model, oil and gasoline should get cheaper, but people won't have any money to buy it with.

This might happen, but it hasn't happened yet.

Do you see any flaws in my reasoning?

WW3 is a scary possibility. Soldiering is certainly a way to get people employed.

 
At 1:32 PM, Blogger Brunswickian said...

"As far as pushing Peak Oil in the background, Ilargi has said that he believes it will drop demand for oil."

Yes, that is what I mean. I don't think the public is all that aware of it anyway. Or anything else, for that matter!

TAE's position on previous bubbles is that they are the result of credit expansion. As we have had a wild binge of credit expansion - the hangover will be commensurate.

If oil becomes unavailable through actual physical shortage or unaffordability, what difference is it going to make in the short to medium term? Not much, I would have thought.

If we had much less people then the ratios would improve.

 
At 1:53 PM, Blogger edgar said...

It would be ironic if a financial collapse leading to bloody ww3 ended up pre-empting peak oil in killing us all. Time to restock the bunker again.

 
At 2:00 PM, Blogger Weaseldog said...

Yes, the bubbles are the result of credit expansion.

But if you have solid and fast industrial growth backing the credit growth, then your bubble won't pop because the industrial growth actually builds wealth. You can hire more workers, produce more product, and make more profits, which can go to paying off loans, then making new loans.

This is the way the system is supposed to work.

But if production breaks down and loans don't get repaid, or you expand beyond the capacity of the market to absorb you product, the system breaks. You can't make sales. You can't pay off your loans.

Do you see what I mean?

The problem isn't only credit expansion, it's credit expansion without any market fundamentals to back it.

Ilargi says this is false however. He argues that credit bubbles can form and pop even if there are strong industrial and market fundamentals to support the credit growth.

I do not know of a single historical reference to support this idea. If we look for instance at the post WWII period, we should see bubble bursts that don't follow energy downturns. There are none. It's as if a strong economy based on solid fundamentals can support credit growth.

"If we had much less people then the ratios would improve."

The magic exponential growth guarantees that resource shortages occur. Humans are wired for exponential growth. It would be better for us if we could control our population growth, but it is what it is.

I'm still sticking my neck out for a financial dislocation in May, based on the ideas I've been writing about.

Oil prices have sustained their high prices, because worldwide demand has not dropped. It's dropped in the US, but China is more than making up for what we are giving up.

The pattern I expect to see is price drop in crude, as another wave of financial turmoil rolls in.

If China can keep increasing their demand, then oil prices may stay high as disaster hits the US markets and banks. that I would expect will make it worse for much of the world.

And Brunswickian, welcome to my blog! Stick around through May and see if I'm eating crow. :) I'm always looking for another opportunity to get things wrong. That's one way to learn.

 
At 2:04 PM, Blogger Weaseldog said...

Bah Edgar, Peak Oil is past tense! :)

Jay Hanson used to argue that after Peak Oil, we'd have a nuclear war to combat it. Or words to that effect.

He believed in direct cause and effect on this. PO -> Nuclear Exchange.

He assumed that we'd ramp up our resource wars to steal oil, and end using nukes...

These days, he's got the idea into his head that our leaders are rational and care about us. He's quite bit older than us. That may be a factor.

 
At 2:59 PM, Blogger edgar said...

Bah Edgar, Peak Oil is past tense! :)

No argument here. I use the term to loosely decribe the downhill slide. To me peak oil is the back half of the curve.

 
At 11:04 PM, Blogger Brunswickian said...

WD,
I see what you mean. I haven't followed all the ins and outs of this dispute.

In general terms though, we have a system built on cheap oil and it needs cheap oil to sustain it as long as possible. The financial system is a ponzi scheme and would have collapsed at some point. If oil had stayed at $10 a barrel we would have had a few more years, I imagine.

Current oil consumption is still around 30 billion barrels a year. Look out below when it drops to 25 then 20.....
I am inclined to agree with Jan Lundberg that one day the trucks will stop rolling into the supermarkets. No food!!

China and the US are at war in a sense already.
http://www.countercurrents.org/hassan240210.htm
How does the West try to stop Sudan to do business with China?

They seek to destabilize the regime. Therefore, they apply the colonialism golden rule: “divide and rule”. During the second civilian war, the United States was financially supporting the Sudanese People’s Army Liberation, a rebellious movement of Southern Sudan. As this movement had money and weapons and as the government had modernized its army with the benefits from oil, the conflict lasted more than twenty years to finally end up in 2005.

The second civilian war was finishing when the Darfur crisis started. It is true that the contradictions between the nomadic tribes and the settled farmers on one hand, and the regional bourgeoisie and the central authority on the other hand, lead to bloody fights in Darfur. It’s also true that on this problem, the Sudanese government is militarist instead of giving priority to the dialogue. But the imperialist powers magnify this problem in order to mobilize the international opinion and destabilize the Sudanese regime. The truth is: if Khartoum says it will stop dealing with China, nobody will speak of Darfur anymore.


Apparently China is stealing secrets from the US:
http://www.cbsnews.com/stories/2010/02/25/60minutes/main6242498.shtml
China may be the number-one espionage threat now. "The Chinese are the biggest problem we have with respect to the level of effort that they’re devoting against us, versus the level of attention we are giving to them," says Michelle Van Cleave, once America’s top counter-intelligence officer who coordinated the hunt for foreign spies from 2003 to 2006.

"Definitely, without a doubt," the Chinese focus most of their espionage on the U.S., says Fengzhi Li, who once recruited spies for China's Ministry of State Security and is now in the U.S. seeking asylum.

The Chinese, says Van Cleave, have had the designs to all of the nuclear weapons in the U.S. arsenal for years and they have been after a lot more lately. "Virtually every technology that is on the U.S. control technology list has been targeted at one time or another by the Chinese," she tells Pelley. "Sensors and optics…biological and chemical processes…all the things we have identified as having inherent military application," says Van Cleave. "I think we are a real candy store for the Chinese and for others."

I don't think we are heading for the superhappy happy ending.

 
At 4:30 AM, Blogger Weaseldog said...

Brunswickian, you've made some good points about China.

Folks were calling me a nutcase when I expressed exasperation at the Clinton administration's work in giving our military technology away to China. I don't think too many of those folks are so happy about it now.

 
At 11:17 AM, Blogger Brunswickian said...

WD, I've had another think.

Is this a fair statement of your postion?

The opportunities for real nuts & bolts economic growth have seriously diminished. Thus synthetic financial growth was substituted leading to the current crisis.

 
At 11:31 AM, Blogger Weaseldog said...

Brunswickian, that's a fair characterization of my arguments.

 
At 11:36 AM, Blogger Weaseldog said...

I'd take it a little further at this point and argue that, the opportunities for real nuts & bolts economic growth have gone into negative territory. Thus turning even rational financial policy a crisis. The financial shenanigans (fraud, theft and ponzi schemes), are a desperate attempt to dodge the inevitable crash.

 
At 1:00 PM, Blogger Brunswickian said...

WD, I agree that resource depletion has been a factor.

Meanwhile, on the war front we have this from Paul Craig Roberts:

http://www.globalresearch.ca/index.php?context=va&aid=17821

The U.S. has already encircled Iran with military bases. The U.S. government intends to neutralize China by seizing control over the Middle East and cutting China off from oil.



This plan assumes that Russia and China, nuclear armed states, will be intimidated by U.S. anti-missile defenses and acquiesce to U.S. hegemony and that China will lack oil for its industries and military.



The U.S. government is delusional. Russian military and political leaders have responded to the obvious threat by declaring NATO a direct threat to the security of Russia and by announcing a change in Russian war doctrine to the pre-emptive launch of nuclear weapons. The Chinese are too confident to be bullied by a washed up American “superpower.”



The morons in Washington are pushing the envelop of nuclear war. The insane drive for American hegemony threatens life on earth. The American people, by accepting the lies and deceptions of “their” government, are facilitating this outcome.

 
At 4:10 AM, Blogger Brunswickian said...

I said previously that bloggers can become myopic.

Now that I think about it, I think that they suffer from a Christ Comlex.

Present company excluded, of course.

 
At 5:42 AM, Blogger Weaseldog said...

Brunswickian, if you find that I'm wrong about something, and I often am, point it and show me why.

Counter arguments do sink into my brain now and then.

 
At 8:02 AM, Blogger fallout11 said...

Weaseldog, your Eureka moment was self-evident to myself and most other mechanical engineers, and I've had this same discussion with Stoneleigh previously at TOD before giving up.

1) Economics is a man made system which attempts to impose man created rules on nature. Attempting to assign arbitrarily "values" to resources (like energy).

2) Thermodynamics, physics, and other natural & physical sciences" are naturally occuring systems that man only wishes to understand, and has no ability to ignore or bypass.

3) Money cannot be converted into energy. It can be made and destroyed, while energy cannot (1st law of thermo, aka conservation of energy).

All life on this planet HAS ALWAYS revolved around energy....even before the dinosaurs. Economics? Not even on the radar until the last few seconds of the geological clock. Puh-leese. It is no more relevant than the color of my monitor's background. Ants attempting to explain a thunderstorm.

 
At 8:16 AM, Blogger Weaseldog said...

Fallout11, for many years I was in two minds of thinking on this.

The part of me that loves science, knew that everything is bound by energy and matter.

Then there was the part of me educated by the schools to understand economics.

The two did not reconcile. when i finally realized that I would have to reinvent my understanding of economics, because it didn't actually work, I finally gained a unified way of looking at society.

One thing that helped, was reading Jeffrey Sachs articles in Scientific American. He helped me to undertsnad that the academics getting Nobel Prizes for Economics were mostly full of crap. It was an article on bringing welath to Africa by building railroads that had me snickering.

After all the Brits already did that to get the wealth out of Africa!

 

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